Profile: Finsbury Growth & Income
Warren Buffett famously said: “When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
Mr Train takes a similar approach, buying good companies and holding them indefinitely. He famously bought one new holding in 2015 (Remy Cointreau), declaring it to be the “first new holding in four years”.
Mr Train has run the trust since 2000, having founded the eponymous Lindsell Train investment company in the same year. He had grown disillusioned with the constraints of managing money within the larger investment houses and wanted to be free to invest where he wanted to invest, without an eye to the weightings within a benchmark, or what his peers were up to.
The Finsbury Growth & Income trust has three main ‘semi-permanent’ ideas. First, Mr Train likes consumer branded goods companies, such as Unilever and Diageo, which provide predictable cash flows and some protection against inflation. His second theme is media and software companies, such as Sage Group. He also likes financial services companies, including the London Stock Exchange and Hargreaves Lansdown.
Mr Train says: “There should be a reason for every holding and a live, current justification for the disposition of every penny of the capital entrusted to you.”
Gavin Haynes, investment director at Whitechurch Securities, says: “This trust has had a phenomenal run of performance. Nick Train’s focus has been looking for long-term winners with a competitive advantage that are in the forefront of their respective industries. These businesses have structural growth and are not reliant on the short-term performance of the economy. It has been a style of investing that has been much in vogue in the current difficult economic climate.”
An increase in the general level of prices that persists over a period of time. The inflation rate is a measure of the average change over a period, usually 12 months. If inflation is up 4%, this means the price of products and services is 4% higher than a year earlier, requiring we spend and extra 4% to buy the same things we bought 12 months ago and that any savings and investments must generate 4% (after any taxes) to keep pace with inflation. Since 2003, the Bank of England has used the consumer prices index (CPI) as its official measure of inflation (see also retail prices index).
A standard by which something is measured, usually the performance of investment funds against a specified index, such as the FTSE All-Share. Active fund managers look to outperform their benchmark index. Cautious fund managers aim to hold roughly the same proportion of each constituent as the benchmark, while a manager who deviates away from investing in the benchmark index’s constituents has a better chance of outperforming (or underperforming) the index.